Ukrainian competition authority warns Nord Stream 2 participants

Ukraine

Following a joint press release of Engie, Gazprom, OMV, Shell, Uniper, Wintershall and Nord Stream 2 AG on 12 August 2016, according to which the parties decided (1) to withdraw their notification from a Polish competition authority and thus not to proceed further with the merger control proceedings regarding the planned establishment of a joint venture by the indicated applicants, and (2) to “individually contemplate alternative ways to contribute” to the project, the Antimonopoly Committee of Ukraine (the “AMCU”) issued an official statement on 19 August 2016 in connection with the said project.

In particular, the AMCU stresses that according to the Law of Ukraine "On Protection of Economic Competition" (the “Law”), establishment of a business entity that will independently carry out commercial activities for a long period of time by two or more business entities, whereas the said establishment does not result in the co-ordination of competitive behaviour between the founders of the said business entity or between them and the newly established business entity, shall be deemed concentration. It also points to an existing legislative requirement to obtain prior merger clearance from the AMCU before the concentration, and that the concentration without the AMCU’s approval, where such approval is required, is considered a violation of Ukrainian competition law.

Furthermore, under Article 5 of the Law, the establishment of a business entity aiming at or resulting in co-ordination of competitive behaviour between the founders of the said business entity or between them and the newly established business entity shall be considered concerted actions. Where concerted actions result or can result in preventing or restricting competition, such concerted actions shall, under para 5 of Article 10 of the Law, be prohibited until cleared by the AMCU.

The AMCU states that participants to Nord Stream 2 should refrain from any actions that may lead to restriction of competition in Ukraine before obtaining approval(s) of the AMCU and suggests that parties file respective notification(s) to the AMCU.